The State of Ict in Mozambique 2018
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THE STATE OF ICT IN MOZAMBIQUE 2018 ALISON GILLWALD, ONKOKAME MOTHOBI AND BROC RADEMAN ACKNOWLEDGEMENTS This research was made possible by the support received from Canada’s International Development Research Centre. The nationally-representative ICT access and use survey referenced in this report forms part of a survey of 20 countries in the Global South (10 in Africa) that canvasses barriers to access from those not connected, as well as the challenges to optimal Internet usage even where there is coverage or the individual has connectivity (see After Access 2017). The survey was supported by the INCM. Special thanks to the INCM for the assistance in validating the supply side data used in this report, especially Joaquim Zingoda. The fieldwork was led by Francisco Mabila and supported by Jan Schenk of iKapadata. Thanks to Anri van der Spuy for editing earlier versions of the report and providing comments. RIA Policy Paper No. 6, Vol. 5, After Access The state of ICT in Mozambique https://researchictafrica.net/2019_after-access_the-state-of-ict-in-mozambique/ January 2019 SERIES EDITOR: ALISON GILLWALD Assistant to Editor: Broc Rademan Proofreading and style editing: Jenny Schnetler Layout and design: Karen Lilje [email protected] Research ICT Africa 409 The Studios, Old Castle Brewery, 6 Beach Road, Woodstock, 7925, Cape Town, South Africa Tel: +27 21 447 6332 | Fax: +27 21 447 9529 International Development Research Centre Centre de reserches pour le développement international ii EXECUTIVE SUMMARY Mozambique has a challenging path ahead if it is to subscriber numbers has forced all operators to lower realise the full potential of the ICT sector in developing their prices to enable them to increase revenue and its economy and to make progress on the information scale their operations. communication technology targets that are intended The inability of the incumbent mobile operator, MCel, as enabling the achievement of the United Nations’ and the fixed line incumbent, TDM, to respond to these Sustainable Development Goals. Mozambique’s suc- pressures has resulted in a decision by the Government cesses include licensing and regulatory achievements to merge the two operations by the end of 2018. in telecommunications, which have stimulated com- While mobile phone ownership (voice services) petition and contributed to meeting national policy stands at 40 percent, Internet penetration is only at objectives. 10 percent. The main reason given for not being on the Vietnamese-backed Movitel has shaken up the Internet is the high cost of Internet-enabled devices. Mozambican mobile market with its high-investment, Like other least-developed economies, Mozambique, low-cost business model – creating the largest 2G/3G Rwanda and Tanzania have not reached the 20 percent network in the country and winning an unprecedented critical mass needed to enjoy the network effects of third entrant share (29%) of the subscriber-based ICTs associated with economic growth and develop- market in its first year of operation. ment, and to harness the opportunities for the public Incumbents Vodacom and MCel have faced intense and private sectors provided by the digital economy. competition from the late entrant, with MCel being Effective regulation of open and competitive close to exiting the market. However, Vodacom gained markets by the Instituto Nacional das Comunicações a giant share of the market (41%), compared to Movitel de Moçambique (INCM) will drive affordable access (29%) and MCel, which moved down to 30 percent. The to broadband networks. However, it is clear that the latter was the first market entrant and enjoyed the majority of citizens are unable to afford devices or to largest number of early subscribers, but was the most use broadband in the always-on, high-speed way they affected by the introduction of SIM registration require- were intended and required to deploy cost-saving ments, which removed large numbers of unregistered and secure cloud services, over-the-top voice and text users from the network. substitutable communications services, as well as Prices for data and voice have fallen dramatically the online services that reduce transaction costs. It is with the introduction of the third competitor and recommended that any excise duties on entry-level, Mozambique now ranks 24th out of 49 countries on Internet-enabled devices be removed to meet the RIA’s African Mobile Pricing (RAMP) Index. Nevertheless, pent-up demand for Internet in the country that is it places third on the 1GB prepaid mobile data index. currently constrained by the affordability of devices. Vodacom initially responded to this pricing pres- Incentivising the extension of backbone and back- sure by investing significantly in its network and haul networks outside of the major provincial capitals competing against Movitel on service quality rather by, for example, aggregating public demand in unser- than attempting to compete purely on price. This has viced areas and through the provision of government proven to be a successful strategy in other African anchor tenancies is also recommended. These points markets in which Vodacom operates, but there is little of presence can be used for the rollout of public access depth to the upper end of the market where people can points for citizens. afford to pay a premium for service quality. Without At the same time, the country will have to this demand in the market’s top end, competition for develop demand-stimulation strategies such as the EXECUTIVE SUMMARY III development of user skills through e-schools and data protection and privacy, and cybercrime, as well e-literacy programmes, in addition to the develop- as responsive systems and the capacity to respond to ment of relevant local content in domestic languages. threats, enforce legislation, protect citizens’ rights and This will stimulate demand and move the country deal effectively with related offences (including detec- towards gaining the critical mass necessary for the tion and prosecution) are key to stimulating demand network effects associated with economic growth and and protecting its growth among users. development. An enabling and integrated legal framework for cybersecurity and electronic transactions, including EXECUTIVE SUMMARY IV CONTENTS Executive summary iv Tables and figures vi 1. Introduction 1 2. Penetration and GNI 2 3. Mobile operator revenues, market shares and prices 3 4. Gender gap 6 5. Urban–rural divide 7 6. Affordability 8 7. Smartphones driving Internet adoption 9 8. No energy, no Internet 10 9. Financial inclusion 12 10. Conclusions and recommendations 13 11. References 15 TABLES AND FIGURES TABLES Table 1: Operator revenue (USD ‘000 000) 3 Table 2: Electricity and water connection to the household 10 Table 3: Household ICT use 10 FIGURES Figure 1: Mobile phone ownership, Internet use and GNI per capita 2 Figure 2: Comparison of ITU active subscribers against 2017 RIA After Access survey data 2 Figure 3: Revenue share of mobile operators 3 Figure 4: Operator market shares 4 Figure 5: The cost of cheapest 1GB data per operator 4 Figure 6: Mozambique’s cheapest prepaid mobile 1GB data compared to Africa’s top performers (USD) 5 Figure 7: Gender disparity in Internet use in Mozambique and other African countries 6 Figure 8: Location disparity in the use of the Internet in South Africa and other African countries 7 Figure 9: Main reasons for not using the Internet (in percentages) 8 Figure 10: Type of mobile phone owned 9 Figure 11: Why individuals do not have a smartphone (in percentages) 9 Figure 12: Internet devices used by households (%) 11 Figure 13: Why households do not have a working Internet connection (%) 11 Figure 14: Mobile money adoption vs mobile banking (percentage split) 12 Figure 15: Use of mobile phone for transactional purposes (multiple answers) 12 vi 1 INTRODUCTION The telecommunications market is structured on the underserved rural areas and particularly the around four vertically-integrated operators, includ- war-ravaged northern provinces, Movitel launched in ing fixed-line incumbent, Telecomunicações de 2012, focusing on its rural supply chain by rolling out Moçambique (TDM). Mozambique’s situation is rare in 153 shops, 12 600 agents and points of sales, and nearly Africa in that it has inter-platform competition in most 4 000 direct sales staff in the rural villages. The entry of of the provincial capitals, and TV Cabo offers an alter- the third player put pricing pressure on the entrenched native to mobile broadband. With no voice services, its duopoly, initiating price wars and significant price telecommunications services are licensed as an Internet decreases in 2012 and 2015. The first market entrants service provider. Internet packages offered by TV Cabo came under such pressure and prices dropped so are priced higher than mobile operators, but they offer dramatically that the regulator, Instituto Nacional das much higher bandwidth and data caps1. Depending Comunicações de Moçambique (INCM) introduced a on the contention ratios between mobile operators, price floor to stabilise the market. the speed offered is likely to be much higher than the ICT policy, regulation and implementation are effective mobile data bandwidth offering with a cap that spread across multiple government departments is six times the size. and organisations. The Ministry of Transport and Despite Mozambique being one of the first countries Communications is responsible for telecommunica- in the region to liberalise its telecommunication sector, tions policy. Responsibility for ‘ICT policy’, which more the market did not take off initially with negative conventionally includes the converging telecommuni- monopoly effects in the fixed market and, until the entry cations and broadcasting or content sectors, but in this of Movitel into the market seven years ago, persistent case refers to information technology (IT) and public duopoly effects in the mobile market. This resulted in a sector use thereof, resides within the National Institute highly concentrated market without effective competi- of Information Communication Technology (INTIC) – tion or the associated consumer welfare benefits.